Bain & Company's 2025 Global Private Equity Report lands with a message that every operating partner and portfolio company CEO needs to internalize: the era of financial engineering driving PE returns is over. Operational value creation is now the primary path to hitting target returns.
Hugh MacArthur, Chairman of Bain's Global Private Equity Practice, calls it a "K-shaped recovery"—one that rewards the most operationally excellent platforms while everyone else fights harder for deals, talent, and capital.
For portfolio companies and the PE firms that own them, the implications are clear: you need an operational efficiency strategy, and you need it now.
The Math Has Changed—Permanently
The headline from Bain's report is stark: "12 is the new 5."
With borrowing costs stuck at 8-9% and leverage levels lower than the last decade, PE sponsors now need something closer to 10-12% annual EBITDA growth to hit a 2.5x return over a five-year hold. That's more than double the growth rate that financial engineering alone used to deliver.
Meanwhile, the liquidity problem persists. Distributions remain stuck around 14% of NAV. Fundraising fell 16% to $395B. LPs constrained by old commitments are concentrating capital with proven DPI performers—not firms still relying on narrative and multiple expansion.
The bottom line: if you're holding companies longer and can't rely on leverage or multiples, the only path to returns is making those companies operationally better.
What "Operational Value Creation" Actually Means in 2026
Bain identifies the winning model as "end-to-end and repeatable: full potential diligence, faster execution, and AI-enabled value creation across commercial, operational, tech, and sustainability levers."
That's not abstract strategy advice. It's a specific operational playbook with three components:
AI-Driven Process Efficiency
The lowest-hanging fruit in most portfolio companies is manual, repetitive work that AI and automation can eliminate. Revenue cycle management, claims processing, customer onboarding, internal reporting—these are processes where GenAI, RPA, and LLM copilots can deliver 30-50% cost reductions in weeks, not years.
Cloud & Infrastructure Discipline
Most mid-market companies are overspending on cloud by 25-40%. When you're trying to hit 12% EBITDA growth, a 35% cloud-cost reduction that takes 60 days to implement isn't a "nice to have"—it's a direct EBITDA contribution that funds the next phase of transformation.
Day-1 Execution Speed
Bain emphasizes "faster execution" for a reason. With hold periods stretching to seven years and 32,000 companies waiting for exits, every month of delay in capturing operational value compounds into millions of lost returns. The old model of spending 6 months on strategy before executing is dead. PE firms need partners who deploy on Day 1.
The 100-Day Operational Efficiency Playbook
At Proactive Logic, we've executed this playbook across 200+ PE transactions. Here's what the first 100 days look like when operational efficiency is the priority:
Rapid Discovery & Quick Wins
Identify the three to five highest-impact operational efficiency opportunities. Map manual processes, audit cloud spend, assess tech debt. Deliver a prioritized roadmap with projected EBITDA impact for each initiative.
First Wave Execution
Deploy AI automation on the top 1-2 process targets. Implement cloud cost optimizations (typically 25-35% savings). Stand up real-time operational dashboards for portfolio oversight. These aren't pilots—they're production deployments.
Scale & Integrate
Expand automation to additional processes. Begin application modernization sprints for the highest-drag legacy systems. Integrate data pipelines for unified reporting. Measure and report actual EBITDA impact against projections.
Institutionalize & Prove ROI
Lock in governance and monitoring. Document savings for LP reporting. Build the repeatable playbook for roll-out across additional portfolio companies. Transition to steady-state operations with measurable KPIs.
Why This Moment Matters for PE Operating Teams
The convergence of several forces makes 2026 a pivotal year for operational efficiency in PE:
- AI maturity has crossed the threshold. GenAI and LLM tools are now production-ready for enterprise workflows. The question isn't whether to adopt—it's how fast you can deploy.
- LPs are demanding DPI, not narrative. Bain notes that "LPs want a defensible identity, a repeatable alpha engine, and credible 5-year ambition anchored in distribution discipline." Operational efficiency results—documented, measurable, repeatable—are what moves the needle in fundraising conversations.
- The cost of inaction is compounding. With 32,000 companies and $3.8T in unrealized value sitting in portfolios, every quarter of operational status quo is a quarter of lost returns. Hold periods are already at seven years. You can't afford to wait.
- The talent model has evolved. You don't need to hire a 50-person transformation team. Fit-to-purpose experts who arrive ready to execute—with no learning curve and no bloated contracts—can deliver the same impact at a fraction of the cost.
The Operational Alpha Engine
Bain's report makes clear that "the cost of alpha is rising while economics are under pressure." The firms that will win in this environment are the ones that build a repeatable operational efficiency engine—one that can be deployed across portfolio companies, measured rigorously, and scaled with each new acquisition.
That means three things:
- A proven methodology (not a generic framework, but a tested 100-day playbook with real results)
- Access to specialized talent that can execute on Day 1 (not consultants who need months to ramp up)
- Technology capabilities in AI, automation, and cloud that translate directly into EBITDA improvement
This is exactly what we built Proactive Logic to deliver. Across 200+ PE transactions, we've consistently delivered measurable operational efficiency gains: 5-point EBITDA improvements in 6 months, 35% cloud-cost reductions in 60 days, and 30% faster post-acquisition integrations.
Proven Results
What to Do Next
If you're an operating partner, portfolio company CEO, or CTO reading this, here are three immediate actions:
- Audit your operational efficiency gaps. Where are the manual processes, the cloud overspend, the legacy system drag? You likely already know the top three—the question is whether you're acting on them.
- Quantify the EBITDA impact. Every efficiency initiative should have a projected EBITDA number attached. If your team can't produce that number, you need different expertise.
- Move now. With hold periods at seven years and exit windows narrowing, every month of delay costs real money. The firms executing today are building the DPI track records that will win LP capital tomorrow.
The Bain report confirms what operators on the ground already know: the PE firms that will thrive in this cycle are the ones that turn operational efficiency into a repeatable, measurable engine for value creation. The question is whether you'll build that engine now, or wish you had in two years.